TMI Blog2017 (1) TMI 555X X X X Extracts X X X X X X X X Extracts X X X X ..... - ITAT, VISAKHAPATNAM ) and by Delhi ITAT, in the case of Dharma Pratishthanam (1984 (8) TMI 117 - ITAT DELHI-A). Thus findings of Ld. CIT(A) on this issue is hereby reversed. Violation the provision of sec. 11 and 12 by giving donation for furtherance of its objects to the other registered charitable trust having similar objects. Nothing has been brought on record to suggest that assessee's to carry out its objects there is any clause in the memorandum prohibiting this. It is settled law that the charitable objects can also be promoted with own efforts and by donating other trust having charitable objects. Our view is supported by Mumbai ITAT in the case of Suman Ramesh Tulsiani (2012 (12) TMI 58 - ITAT MUMBAI) which again relies on various other judgments besides, Hon'ble Bombay High Court in the case of trustees of the Jadi Trust [1981 (4) TMI 75 - BOMBAY High Court ]. Thus no hesitation to hold that assessee's trust can promote its charitable objects by giving donation to other charitable organizations and such donations will amount to application of income of the trust.Thus, the findings of the Ld. CIT(A) on the second issue is also reversed. - IT APPEAL NO. 1959 (PUN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h would have had the effect of reducing to NIL even the taxable income of ₹ 3,74,48,948/- computed by him Without prejudice to the above Ld. CLT(A) ought to have at least directed the A.O. to give the Appellant an opportunity to comply with the provisions of Section 11 (2) of the Act. 2. Brief facts are as under: 1. The assessee is a s company registered u/s 25 of the Companies Act, 1956. It is also registered u/s 12A of the Income Tax Act as per letter dated 02.11.2007 (Annexure 1) issued by the Commissioner of Income Tax-1, Pune. In terms of its Memorandum of Association enclosed as Annexure 2 before AO the company was formed with the main object of carrying on activities that would support, promote and encourage education among masses including the underprivileged. There are other charitable objects relating to removal of poverty and unemployment, providing medical aid, undertaking activities that would help talented sports persons. To achieve its object the assessee trust has partnered with the Pune Municipal Corporation, State Govt. and central Govt. agencies also to carry out affiliated charitable and educational projects to further its objects. Similar t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of amount applied by assessee to charitable purposes during the year over income which included corpus donation) did not qualify for exemption u/s 11(1)(d) or 11(1)(a) of the Act and was held as taxable income, resulting in impugned demand. 3. Being aggrieved, assessee preferred first appeal where Ld. CIT(A) observed as under : Considering the above facts, the A.O. had two objections: (a) The amount raised from Thermax Ltd. considered as corpus donation is not a corpus in nature as the donor has not specified the purpose for which the above amount was required to be spent, hence the benefit of section 11(1)(d) cannot be given to the appellant. (b) Since the amount was not spent by the appellant itself on the object of the trust but has been donated to some other concerned trusts, the amount so spent cannot be considered as correct application of income in terms of section 11(1)(a) of the I.T Act. (iii) As regards the first objection regarding treatment to be given to the donation amount received from Thermax Ltd. whether voluntary in nature or corpus donation, it is pertinent to understand the meaning of corpus. In common parlance, this term is understood as cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Company.'' The content of the above letter clearly shows that no specific direction, whatsoever, has been given by the donor to the appellant done regarding utilization of the fund but has merely mentioned that it should be part of corpus of the appellant trust. Hence, considering the above discussion and facts available on record, the impugned donation may not fall under the category of corpus donation except the amount of ₹ 78 lacs specifically given or earmarked for the project namely, Savitribai Phule English Medium School Further rightly pointed out by A.0 that the alleged corpus fund of ₹ 4,81,13,000/- has ultimately been donated to other several concerns as voluntarily donation by the appellant and the said amount has not been directly applied by the appellant on it's own objects. Considering the above facts of the case, the amount of ₹ 9,37,00,000/-(10,15,00,000/-78,00,000/- cannot be considered as corpus donation as it lacks specific direction from the donor with regard to utilization of the fund. However, the same deserves to be treated as voluntary contribution/donation, which is required to be credited in the income and expenditure a/c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant has applied an amount of ₹ 6,90,26,039/- only toward it's charitable object during the year under consideration, which is 64% of the gross income and accordingly there is a shortfall of 21%. As the appellant has failed to comply the statutory requirements in terms of section 11 (1)(a) r.w.s 11(5) of IT Act, by not submitting Form-10 before the concerned A.O within stipulated time. Hence, the benefit of section 11 and 12 of I.T Act has correctly been denied by A.O for the year under appeal However, the total taxable income will be at ₹ 3,74,48,948/- ie the amount of surplus determined in income and expenditure a/c mentioned at page 23 of the impugned appeal order. Accordingly ground of appeal No. 2 is dismissed.'' Though the assessee's taxable income was in effect reduced from ₹ 5,61,83,906/-to ₹ 3,74,48,948/-, however, Ld. CIT(A) held the assessee's appeal as dismissed. 4. Ld. Counsel for the assessee contends that there is no dispute that assessee trust since past many years is a genuine charitable organization whose various programs are partnered by Pune Municipal Corporation, State and Central Government; these charitable ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome for charitable purposes. (3) Dharma Pratishthanam 11 ITD 40 (Delhi) : There is no obligation to retain corpus forever and may be used for objects of the trust. These judgments while laying down clear propositions as mentioned above in turn rely on catena of other binding judgments mentioned in these orders. 6. Apropos Ld. CIT(A)'s observation that the corpus funds of ₹ 4,81,13,000/- was ultimately donated to other charitable institution amount to non application of the income towards assessee's own objects has no legs to stand as even Hon'ble supreme court has held such donations to be permissible application of income derived from the property of the trust. The view adopted Hon'ble Bombay High Court in the case CIT v. Trustees of the Jadi Trust (supra) to the effect that Donating income to another charitable trust amounts to application of income for charitable purposes which is a binding precedent which is to be followed with utmost request. 7. Apropos Ld. CIT(A)'s refusal to consider the assessee's alternative ground that in case it is held that in view of the new interpretation the 85 % of rust income has not been applied in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble. 12. In our considered view, voluntary contribution of Thermax Ltd towards corpus of the trust cannot be included in the income of the assessee in clear terms of section 11(1)(d). Our view is fortified by Visakhapatnam ITAT judgment in the case of Nagarjuna Educational Society (supra.) and by Delhi ITAT, in the case of Dharma Pratishthanam (supra.) 13. In view of the above facts and circumstances, the findings of Ld. CIT(A) on this issue is hereby reversed. 14. Apropos the second issue alleging that the assessee has violated the provision of sec. 11 and 12 by giving donation for furtherance of its objects to the other registered charitable trust having similar objects. Nothing has been brought on record to suggest that assessee's to carry out its objects there is any clause in the memorandum prohibiting this. It is settled law that the charitable objects can also be promoted with own efforts and by donating other trust having charitable objects. Our view is supported by Mumbai ITAT in the case of Suman Ramesh Tulsiani (supra.) which again relies on various other judgments besides, Hon'ble Bombay High Court in the case of trustees of the Jadi Trust. 15. In vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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